Asbestos 101

In which the professor and his wife share the secrets of low bids, high profits, and your money

(MCO's asbestos workers actually earn substantially less than the Otazos claim. The company's payroll records reflect that workers earn between six and eight dollars per hour, and supervisors earn about ten dollars an hour. While it is not uncommon for companies to charge the county at higher rates than their employees take home in order to cover various expenses, Julio and and Cruz Otazo refused to give New Times a detailed breakdown of how they arrived at the hourly rates they are now charging.)

The cost of those negative-air-pressure machines is also part of Otazo's claim. He is charging the aviation department for seventeen machines, each at a rate of $55 per day for 126 days. The total cost: $117,810. Industry sources, however, say the machines probably cost MCO less than $10,000 to purchase outright. The company buys much of its machinery from Miami-based Needham Industries. An official at Needham says that over the years, MCO has purchased close to 200 negative-air-pressure machines for its various projects. Rather than brand-new machines, MCO normally buys used equipment, the official explains, each costing between $200 to $500. At $500 apiece, the seventeen machines would have cost MCO only $8500.

But even assuming MCO purchased new machines for the airport project, the figures still don't add up. The Needham official says a brand-new negative-air-pressure machine costs between $1200 and $1500. At the top price of $1500 for each of the seventeen machines, the total comes to $25,500. (Moreover, when the airport job was completed, MCO was able to keep the machines for use on other projects.) New Times asked Julio and Cruz Otaza how much they paid for the machines they charged the county $117,810 to use, but the Otazos refused to respond.

In addition to the seemingly exorbitant rental rate MCO is charging the aviation department, the company is also including another $17,042 in "profit" it believes it deserves for providing the machines. With the inclusion of insurance, other miscellaneous costs, and $22,228 in "overhead," MCO is demanding $187,458 for the equipment it kept on the second floor while no work was being done.

Julio Otazo also claims that MCO incurred $277,746 in "extended" overhead expenses associated with the second floor during the four-month period in question. Apparently those increased expenses themselves created even more overhead, because Otazo adds another $49,584 in overhead on the overhead. Otazo then states that his company is entitled to make a profit of $38,015 on those overhead expenses. How did he arrive at all these figures? Otazo refuses to release the information publicly because, as he argues in his claim, it is drawn from MCO's private financial records. According to his claim, he is willing to share the information with aviation department officials if they are interested. (The aviation department's Narinder Jolly says that no airport officials have made such a request.)

Compounding all these costs is something Otazo refers to as "loss of business opportunity" and lost gross profit. Otazo's claim argues that MCO had to remain prepared to resume work on the second floor as soon as negotiations with the county were concluded. Because of that, the company was prevented from bidding on other projects during the four-month period work was suspended. The estimated losses, according to Otazo, amounted to $419,567. Once again, however, Otazo will not publicly disclose how he arrived at this figure. New Times asked Julio and Cruz Otazo to identify the specific business opportunities they missed during those four months, but they refused to respond.

Total costs claimed by MCO as a result of the four-month delay on Building 25's second floor: $1.2 million.

According to MCO's claim for $7.4 million, the problems on the second floor were minor in comparison to the handicaps it suffered on the overall project at buildings 24 and 25. And targets for blame were plentiful: the Dade County Aviation Department, the airport's consultant, bigoted inspectors, the United States Army, even Mother Nature.

Because the company's work was not completed by the June deadline, and in fact dragged on into the fall, MCO was forced to cope with the added aggravation of Hurricane Andrew. Just one example: The company claims it incurred costs of $89,663 to secure its equipment before the storm, to unsecure it afterward, and then to clean up the work areas. But there was more. The U.S. Army took over MCO's field trailer at the airport, and soldiers regularly broke the locks on MCO's asbestos Dumpsters in order to discard their own trash. The aviation department "was fully aware of this situation, but I was advised to try and do the best I could under the extenuating circumstances and to cooperate as much as I could with the Army, which I complied [sic]," Julio Otazo wrote in MCO's claim. Cooperation came with a price A specifically, $20,837 for what Otazo described as "Army interference."

As if the hurricane weren't enough, a faulty freight elevator cost MCO $329,753 in additional manpower to transport bags of asbestos, according to Otazo. And the summer rains of 1992 caused more headaches A very expensive headaches.

A leaky roof over buildings 24 and 25 added $372,185 to the cost of finishing the job. Every serious rainstorm forced the Otazos to divert their workers to the cleanup and filtering of contaminated water. Julio Otazo claims that following each "heavy downpour," the company used a minimum of 60 workers eight hours a day for three full days to clean up the mess. And, he says, there were nine such downpours. Otazo is charging the county more than a quarter of a million dollars for that 60-man work force alone. In addition, the cleanup efforts required seven supervisors and the full-time attention of Julio Otazo himself.

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